A lot has been said about the issues of driver shortage and the high turnover rates that the trucking industry faces today, but nothing much has been done to alleviate that. The bedrock to these problems lies with the compensation that drivers get for being on the road – a figure that has not risen much over the last three decades.
A trucker in 1980 earned an average of $38,618, which when adjusted to the present would be upwards of $111,000 a year. But the reality is dreary, as a trucker makes around $41,000 now, which is a third of an ideal situation.
FreightWaves spoke with Truckonomics, an organization looking to improve the lives of drivers on the road, by providing them a gateway for financial security. “The only way for driver retention is by putting money into the driver’s pocket,” said Myron Manuirirangi, the CEO of Truckonomics. “We help truck drivers become owners in a fleet of trucks and move drivers from the employee side of the equation into the ownership side. Truckonomics is a program that facilitates this transition, and we make it really affordable without being an independent contractor.”
Manuirirangi, during his stint as a truck driver, saw the endless suffering of drivers on the road, and the way most of them lived by “paycheck to paycheck” while struggling to put food on the table. “What Truckonomics focuses on is giving the drivers the ability to leave the industry with an income and a retirement plan. No existing compensation plan actually prepares the driver for the time when they stop driving.”
Manuirirangi insisted that the industry does not have a driver shortage problem, but rather a problem with providing compensation that would let drivers stay in business. “I think a six-figure income is the magic number. This is because the job doesn’t change and people quit the industry as it is not worthy enough to stay. Most of the drivers are out there only to make money and provide for their families,” he said. “Our focus was to break that six-figure mark and beyond that, create an incentive for them to stay.”
Daniel Donohue, the Communications Director of Truckonomics, weighed in saying the only way out of this predicament is by turning drivers from being wage earners to capitalists. “Drivers should be owners of the assets, that is not just linking their ownership to their own truck and driving it, but participating in ownership of larger company or fleet,” he said.
The idea behind Truckonomics is simple. The company creates an enterprise and funds it to buy a truck, running it in a way that it becomes a profitable unit. “Conceptually, we generate revenue out of the truck, and we use the profits to purchase another truck, and this goes on up to five trucks, which we manage over the course of time,” said Manuirirangi. “While we are running those trucks, we essentially cut 90% of the company away and offer it to the truck drivers themselves. So while they are driving for a trucking company, they have an opportunity to take ownership of another truck or a fleet of trucks.”
Manuirirangi explained that the company was brainstorming on going through the early stages of understanding the way to integrate and transition the concept into the industry. Truckonomics uses a two-pronged approach for reaching out to the community. “For one, we have started reaching out to the drivers. And secondly, we have identified a handful of companies that we think would be perfectly suited to be empowered with a compensation plan to attract drivers that we think would make perfect sense that they grow,” said Manuirirangi. “We reach out to these companies and explain how the retention and recruiting problem can be solved with a compensation plan that applies these principles. But leveraging that program across a small group of like-minded carriers is important.”
For the most part, selecting a few carrier companies is about bringing order into the ecosystem. Manuirirangi is of the opinion that the trucking industry suffers from too many truck owners and not enough trucks. “When you have people coming into the industry with their truck, that doesn’t actually solve the capacity problem, and what it does is it makes the industry a little more volatile,” he said. “The industry needs cleaning out. If you allow a concentration of the best companies to grow at an accelerated rate, you end up seeing that the drivers recognize the value of going to work for the larger companies – because they are offering a compensation program that no one else is offering.”
Drivers in general look at large carrier companies as a hard taskmaster, and see no gains in working for one – courtesy the over 90% reported turnover rate every year. The only way to change their perspective is by bringing in compensation reforms and to push them to work along with the carriers as a collective, with a concerted effort towards growth and profitability for both the stakeholders.
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